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FOREX Basic Strategy

  

Technical and fundamental analyses are the two main strategy areas in the FOREX market, which are exactly the same as in the equity markets. Nevertheless, technical analysis is definitely the commonest strategy that is employed by individual FOREX traders. Below is a short overview of both kinds of analysis and how they can apply more directly to FOREX trading:

Basic Analysis
If you find it difficult to value one company, you must try to value an entire country instead. Basic analysis in the FOREX market is often quite difficult to determine, and is often only used as a method to forecast long-term tendencies. Nonetheless it is important to state that several traders do trade short term strictly on news releases.
 
 
There are many different fundamental indicators of the currency values released at several different times. To get you started, here are a few of them:
• Non-farm Payrolls
• Purchasing Managers Index (PMI)
• Consumer Price Index (CPI)
• Retail Sales
• Durable Goods

Bear in mind that these reports are not the only essential issues that you have to look out for. Meetings can help you get some quotes as well as commentary, which can affect markets just as much as any report. These meetings are frequently organized to talk about any interest rates, inflation, and other concerns that have the capacity to have an effect on currency values.

Even modifications in wording when addressing certain issues such as the Federal Reserve chairman's comments on interest rates; can be the reason for a volatile market. Two important meetings that you must keep an eye out for are the Federal Open Market Committee as well as Humphrey Hawkins Hearings.

Through analyzing the reports and investigating the commentary, FOREX fundamental analysts find it easier to get a better understanding of any and all long-term market trends and also to enable short-term traders to be able to make the most of extraordinary happenings. If you choose to follow a basic strategy, you’ll want to make sure you keep an economic calendar at hand at any time so you know when the reports are released. Your broker might also be able to give you real-time access to this kind of information.

Technical Analysis
 

Identical to their complements in the equity markets, FOREX trading market analysts analyze price tendencies. The only main difference between technical analysis in FOREX and technical analysis in equities is that FOREX markets are open 24 hours a day.

Due to this, some types of technical analysis that factor in time have to be altered in order for them to work with the 24-hour FOREX market. Below are a few of the most common types of technical analysis used in FOREX:
• The Elliott Waves
• Fibonacci studies
• Parabolic SAR
• Pivot points

The tendency is for a lot of technical analysts to merge technical studies in order to make their predictions on your behalf more accurate. One of the most common methods for them is to combine the Fibonacci studies with the Elliott Waves. Other analysts prefer to produce trading systems in an effort to locate similar buying and selling conditions repeatedly.

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